The Global Refining Crisis: War, Record Profits, and a System With No Spare Capacity

Record downstream profits for major oil companies. The supply scarcity has produced extraordinary earnings:

• Chevron reported its highest quarterly profit in at least six years — $12 billion in adjusted Q2 2026 earnings . Its US downstream earnings surged nearly 6x year-over-year to $2.41 billion .
• ExxonMobil posted $14.5 billion in Q2 2026 income, more than double the same period last year .
• Shell booked $10.8 billion in net earnings, its second-highest quarterly profit ever .
• US refining margins for gasoline and diesel hit all-time records. The average per-barrel margin for producing two barrels of gasoline and one barrel of diesel from three barrels of crude — known as the '3-2-1 crack spread' — rose as high as $70 a barrel in mid-July 2026, the highest level on record .

Combined, Chevron, ExxonMobil, and Shell raked in on average some $404 million in profits every day for the last three months of Q2 2026 .

Fragile outlook — profits driven by war, not fundamentals. Reuters titled its analysis "Iran war ushers in oil refining golden era. It won't last" . The record margins are a direct consequence of wartime supply destruction: the Strait of Hormuz closure, direct attacks on Middle Eastern refineries, and Ukrainian drone strikes on Russian processing plants . The U.S. Energy Information Administration (EIA) estimates it will take until late 2026 or early 2027 for pre-conflict production and trade patterns to resume . The IEA warned global oil output would decline by 3.9 million bpd in 2026 due to the conflict alone . Analysts across the board stress these profits are temporary and do not reflect structural industry health.

Political backlash and multiple investigations. The surge in fuel prices has triggered an aggressive political response:

• President Donald Trump instructed the DOJ in June 2026 to investigate Exxon and Chevron for not lowering gasoline prices, accusing major oil companies of price gouging .
• Senators Adam Schiff, Sheldon Whitehouse, and Elizabeth Warren have separately demanded federal investigations into potential price gouging and massive windfall profits .
• The DOJ and FTC jointly called on all state attorneys general in July 2026 to join the investigation into retail gasoline prices .
• US gasoline prices rose by as much as 52% since the Iran war began, with 27 oil and gas companies on track to rake in over $40 billion in Q1 2026 alone, according to Senate data .

Aramco's structural warning. Beyond the immediate war-driven losses, Saudi Aramco's vice president of market analysis and sustainability, Musaab Al Mulla, warned in June 2026 that the refining sector has been chronically underinvested for years, with roughly 3 million bpd of capacity already lost between 2020 and 2023 due to a lack of new projects — even before the recent conflicts . "Now we realize that having those refineries could have significantly alleviated the effects of the current crisis," Al Mulla said at the S&P Global Energy Middle East Petroleum and Gas Conference in London . This structural deficit means the system has no buffer even when peace eventually returns.

What This Means for Consumers

The refining crisis translates directly to pain at the pump. Diesel and jet fuel production in Asia was expected to decline by at least 1 million bpd in April 2026 alone as refiners processed lighter crude grades due to supply constraints . Gasoline inventories sit near multi-year lows across major consuming regions . Even a partial recovery in crude production — which has improved slightly following temporary Gulf export windows — has not relieved the refining bottleneck, because the plants themselves are damaged, offline, or unable to access their usual crude grades. The EIA projects it will take until early 2027 for normal trade patterns to resume, meaning elevated fuel prices are likely to persist .